Most mainland investors can still only watch gains in Alibaba Group Holding Ltd., as China’s most valuable listed company extends increases after its Hong Kong stock exchange debut.
Alibaba is the first company to apply for a secondary listing under Hong Kong’s new regulations. The company is already listed in the US, and this new listing will allow investors in Hong Kong, but more importantly China, to finally invest in one of China’s most profitable companies.
As things stand, Alibaba is poised to be a powerhouse stock for investors around the globe. Here are three reasons why I believe Alibaba’s stock is a good bet for Hong Kong and Chinese investors.
” It’s a unique and rare asset — like Tencent and Meituan — that can’t be found in mainland-listed stocks……Though we don’t own Alibaba shares yet, I think it’s important that we do once it becomes available through the stock connect — at the right price.”Qu Shaohua, managing director at Acroguardian Investment Co.
#1 Consumer spending in China sets Alibaba up for success
Alibaba going public on the Hong Kong market allows Mainland China investors, through the Hong Kong Stock Connect schemes, to access one of the most powerful e-commerce companies in the world. And this is a great thing, since Alibaba has had a phenomenal 2019 and still has room to grow.
The company just broke sales records on Single’s Day, the biggest shopping day in China, raking in over US$30 billion in gross value merchandise (GMV) in less than 24 hours. This marks a 26% increase over the prior year, far exceeding any numbers seen in the US.
This trend of Chinese consumer spending is set to continue. The disposable income of Chinese households tripled between 2010 and 2020. As a result, Alibaba is looking at more customers and more consumer spending.
An IPO in Hong Kong will only help it expand its market, effectively growing its brand.
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#2 Hong Kong listing will help Alibaba grow its presence
Already a well-known, everyday site within China, Alibaba is becoming more famous internationally. Alibaba’s listing on the NASDAQ in 2014 helped with this, allowing investors in the US access to China’s massive e-commerce market.
But now, Alibaba has the chance to go on tour again, attracting even more investors from both Asian and international markets. The company announced that it would be kicking off a press tour to encourage investor interest.
In July 2019, Alibaba launched a buissness-to-buisness (B2B) online marketplace in the US, aiming to compete with American e-commerce giant Amazon (NASDAQ: AMZN). The company’s multiple forays into international markets will help it capitalise on opportunities outside of China.
#3 Record-breaking Singles’ Day
Alibaba set a sales record on Singles’ Day. What the heck is Singles’ Day? It’s the world’s biggest shopping day of the year in terms of retail sales — bigger than Thanksgiving, Black Friday, Cyber Monday, and the weekend in between combined. Singles’ Day was founded in Nanjing University when Chinese students began hosting parties for single people to combat the social stigma attached to people without romantic partners. It started out as Bachelors’ Day, but soon, the holiday was extended to all single people.) Nov. 11 was chosen because the date 11-11 is written with four “ones” representing singles.
In 2009, Alibaba started offering Singles’ Day discounts and has since transformed the day into a 24-hour bonanza of online shopping in China.
This year, sales for Alibaba exceeded expectations. The company said sales on its platform had risen to $36.5 billion by 11 p.m. after passing last year’s full-day total of $30.8 billion before 6 p.m. This year’s Singles’ Day was the first since Alibaba’s founder Jack Ma stepped down in September. (He remains a member of the Alibaba Partnership, a 36-member group with the right to nominate a majority of the company’s board of directors.)